For example:
A country has an outstanding problem with waste and is in need of an institution that will solve the problem.

An official Institution for solving the waste problem is established and this institution truly works on solving the problem, but at minimal capability and tempo.

As the institution keeps working on solving the problem and becomes more popular, like a magnet, it attracts the country's people and students that recognize the waste problem and wish to contribute towards solving it.

The people and students join the institution which deals out tasks to them, but the tempo at which things move render the benefits of institution's existence almost insignificant in practice and only significant on paper and intent.

And any individual who experiences even the smallest seed of doubt that something is wrong with the institution, quickly dismisses this possibility as absurd since the institution is well-funded, advertised, and regarded as a place of authority and as a trusted leader in solving the problem so there could be no way that there is something wrong with the institution.

And since the institution is doing something positive, at the surface level which is the only level most people see, even though in reality it is sabotaging progress, any individual who doesn't dismiss the seed of doubt and challenges an investigation of the institution or dares to say that the institution is maybe sabotaging the country, is quickly condemned and ostracized.

Sabotage means to deliberately destroy, damage, or obstruct (something), especially for political or military advantage, but the concept explained above is more subtle. Is there a word in English designated for exactly such thing?

We Brits were world leaders in this sort of thing back in the 70s. Unions would call on their members to work to rule or stage a go-slow (as opposed to passive resistance, as promoted by Gandhi and others). But for any given context, sabotage would be well enough understood.
– FumbleFingersNov 22 '17 at 15:20

Add "insidious" to "sabotage" and that might help conveying the message to a good extent. "The company is insidiously sabotaging the progress."
– user206150Nov 22 '17 at 17:44

This is one type of diversionary tactic. The point is that the organization notionally responsible attracts what ever attention there is, and not the person or group who is actually in authority. And it has been raised to an art form when it comes to matters of corporate or municipal environmental compliance.
– Phil SweetNov 23 '17 at 11:33

The distinction between go-slow and what I'm describing above is that the entire organizing is conceived as a do-nothing group, but it supplies window dressing and a place to send correspondence. And it knows exactly how little it can get away with. It is common where regulatory compliance involves expenses, but no income potential.
– Phil SweetNov 23 '17 at 11:41

Thank you FumbleFingers, user206150, and Phil Sweet. Insidious sabotage and diversionary tactic are very helpful terms. I would like to know whether there is some official term for the diversionary concept described (e.g. the way the term 'planned obsolescence' was given to the diversionary tactic of deliberately planned deterioration)
– MattyAug 29 '18 at 8:10

This is not negligence. Negligence is when you fail to do something required.
– Stella BidermanNov 22 '17 at 16:00

I thought negligence might fit considering they're failing to look after the company. Most of what OP described seemed to be a lack of doing things, rather than going out of their way to do things which seemed like negligence to me. But I might have misunderstood it, if so, my bad :)
– millman97Nov 22 '17 at 16:05